It will probably cost more initially to set up a well-drafted living trust than to have a will prepared. A true cost comparison should include not only the expense to establish the will or trust, but also what it will cost should you become incapacitated and after you die.
The Key Takeaways:
o A living trust document has more provisions than a will because it deals with issues while you are living and after you die, while a will only deals with issues that occur after your death.
o A properly prepared and funded living trust will avoid court proceedings at incapacity and death. A will provides no such protection and can, in fact, ensure court intervention at both events, which can be very costly (in time, privacy and dollars) to your family.
Instructions at Death and Incapacity
Both a will and a living trust contain instructions for distributing your assets after you die. But a living trust also contains your instructions for managing your assets and your care should you become incapacitated.
A Living Trust Avoids the Costs of Court Interference at Incapacity and Death
A properly prepared and funded living trust (one that holds all of your assets) will avoid the need for a court guardianship and/or conservatorship if you become incapacitated. The person(s) you select will be able to manage your care and your assets privately, with no court interference.
A will can only go into effect at your death, so it can provide no instructions regarding incapacity. In that case, your family would almost certainly have to ask the court to establish a guardianship and/or conservatorship for your care and your assets–a process that is public, time consuming, expensive and difficult to end.
What You Need to Know. The same living trust document that can keep you out of a court guardianship at incapacity can also keep your family out of probate court when you die. But a will must go through probate. Here in Montana we are a Uniform Trust Code state and the probate process is not overly burdensome. However, Probate can still be time consuming (minimum of 6 months, maximum 2 years).
Costs to Transfer Assets…Pay Now or Later
There may be some minor costs to transfer assets into your living trust when you set it up, and then from your trust to your beneficiaries after you die. But these will be minimal if you and your successor trustee do much of the work yourselves. With a will, the probate court (with its costs and attorney fees) is the only way to transfer your assets to your heirs after you die. So you can pay now to set up your trust and transfer titles, or you can pay the courts and attorneys to do this for you after you die.
Actions to Consider
o Find out what probate costs are where you live. Probate in Montana a Personal Representative is entitled to reasonable compensation for services and cannot exceed a a maximum fee of 3% of the first $40,000 of the value of the estate as reported for federal estate tax purposes and 2% of the value of the estate in excess of $40,000. The attorney involved in the probate in entitled to a fee not in excess of 1 1/2 times the maximum compensation allowed to the personal representative.
* Similarly, ask your attorney to estimate what the costs would be if you become incapacitated tomorrow and, if you are married, if your spouse becomes incapacitated the next day. (Practically speaking, and it is true in Bozeman, Montana, this will be impossible to estimate because no one will be able to predict how long the incapacity will last or what complications might arise. The mere uncertainty of these costs should give you pause–and propel you to plan for incapacity.)
* Add these estimates to the cost of having a will prepared–and compare that to the cost of a living trust. When you make a true comparison, you may conclude that having a living trust actually costs less than a will.
For more information of probate in Montana See the MSUextension article on Probate in Montana: http://msuextension.org/publications/FamilyFinancialManagement/MT199006HR.pdf
— Justin Bryan with the Bryan Law Firm, P.C. Bozeman, Montana